What happened?

On August 4, 2025, the California Court of Appeal issued a decision in Hirdman v. Charter Communications, clarifying how employers may calculate paid sick leave for commissioned outside sales employees.

Overview:

The Ruling: This decision simplifies payroll practices and reinforces the importance of accurate employee classification under California’s exemption rules.

• The court confirmed that outside salespersons are exempt employees under California law.

• Employers may calculate their paid sick leave using the base hourly rate, excluding commissions, if this matches how other paid leave (e.g., vacation) is calculated.

• The ruling applies the method outlined in Labor Code § 246(l)(3) for exempt employees.

• The court rejected a non-binding opinion from the Labor Commissioner that suggested commissions should be included.

What This Means for Employers:

• Employers may exclude commissions from sick leave pay for outside sales staff.

• Employers should ensure consistency in how all forms of paid leave are calculated.

• Employers should maintain clear documentation of employee classifications and update policies to reflect this legal clarification.

Source References

• California Court of Appeals – Hirdman v. Charter Communications, LLC 8/4/25 CA4/1 (D084304 – 08-04-25)

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